The PESTEL analysis is a strategic analysis that aims to look at all the factors having an impact, or potential impact, on a company, a market, or a country. These impacts can be classified into several categories: Political, Economic, Social, Technological, Ecological, and Legal.
This economic, social, political, sociological, and fiscal union has been developed over several decades, following several waves of extension. From the European Economic Community to twelve States, in the 1990s. Europe then expanded several times, going as far as the creation of a common currency established in 2002 for a large majority of its Member States.
We will analyse these categories one at a time.
1. Political impacts
The potential political impacts on the European Union are manifold. Political stability is one of the keystones of the European Union, created following the major world conflicts of the 20th century. Political tensions between states and open conflicts, such as the war between Ukraine and Russia declared in February 2022, are very impactful elements for the European Union. One of the founding elements of the European Union is indeed the maintenance of peace in Europe after centuries of war. The political decisions that pushed Russia to declare war against Ukraine are likely to have massive repercussions on the European Union. For example, countries are not all sensitive to this attack on democracy in the same way, in the same proportions. The neighbouring countries of Ukraine are necessarily much more impacted than other more distant countries, such as Portugal, for example. In any case, major political changes are likely to strongly influence the European Union or even call it into question.
The rise of political radicalism in Europe is also likely to have great significance for the European Union. We are witnessing the rise of extreme movements in different countries, as very recently in Italy. This can upset the political balance in progress in the European Union and call into question alliances, joint work, etc. The political decision of a state to leave the European Union, to leave the Eurozone, or to reinstate customs barriers, for example, would have a strong impact on the European Union as a whole. Political decisions, in terms of environmental consultation or, for example, concerning the management of the energy crisis in Europe in the fall of 2022, are also factors of significant influence on the European Union. Similarly, decisions on taxation can impact the European Union, if we speak, for example, tax harmonisation between the member states or tax / social dumping in particular.
Finally, political elements such as the death of Queen Elizabeth II in September 2022, or a change of President of the United States, can have far-reaching consequences for the European Union. The sovereigns of the allied countries have had significant impacts on the European Union, its leaders, and its citizens.
2. Economic impacts
The economic context also has a strong impact on the European Union. Indeed, in a booming economic period, states are much more inclined to agree, unite, and find common governance. In more difficult economic periods of recession or slowdown in growth, this can weigh negatively on the European Union. In particular, because the states can be encouraged to refocus on themselves. If the European Union is limited or called into question, economic exchanges will be made more difficult and this will, in turn, weigh negatively on growth in a kind of vicious circle.
One of the roles of the European Union is also to be common support for countries outside the European Union that feel the need. When the economic situation becomes tense, the European Union sees its means limited and can reduce its foreign-oriented forces, in a kind of reflex close to nationalism, but on a European scale.
3. Sociological elements
The sociological elements that can influence the European Union are diverse. We can first cite History and the consciousness of History. The generations of children born in the 1980s learned a lot about the Second World War in school, often had family members who participated in it and are, therefore, generally much more receptive to the idea of a European Union. European, of a unified Europe.
In addition, consumption, lifestyle, travel, and behaviour habits are elements that can quickly influence the European Union. The weight given, for example, to environmentally friendly transport methods in major countries such as Germany has an impact on the European Union as a whole. This can inspire other member countries and encourage them to develop comparable policies, which establishes certain virtuous circles between members of the European Union.
Finally, the demographic growth of the Member States is a factor that can have a significant impact on the European Union as a whole. If the area is a dynamic area, in full development, or an ageing area where generations are not renewed, then the approach is very different in various areas.
4. Technological elements
Several technological elements can influence the European Union. Space development programs, 5G technologies, weapons or chemical attack technologies, and nuclear developments, all these elements directly or indirectly influence the European Union. In the same trend, the rise of cryptocurrencies (which can be considered as an economic, political, sociological, and even technological element) can also impact the European Union, as well as, the decisions of the European Central Bank, etc. Research and development can have a significant impact on the European Union, in particular, because it is very dynamic and highly developed in the United States and competes directly with research and development within the European Union.
5. Ecological elements
The rise of ecological pressures and awareness of the importance of respecting the environment, and limiting its environmental impact, strongly influence the European Union. For example, they pushed it to adapt common European rules in terms of limiting the resources used, recycling, etc.
Decisions relating to major wind energy projects, the management of the gas crisis of autumn 2022, to major programs to maintain or phase out nuclear power can also have a far-reaching impact on a union such as the European Union. Germany's refusal to use nuclear energy, for example, influences the overall energy policy of the European Union.
6. The legal elements
The European Union is a very framed union, strictly regulated. Anti-competition or anti-trust laws, for example, have a relatively strong impact on the European Union as a whole. They force it to rethink its organisation and its structure.
The European Union thus legislated in mid-October 2022 to encourage all market players to limit their ecological damage and waste, etc.
In 2020, the European Union was strongly impacted by legal elements relating to the European GDPR regulation concerning the protection of consumer data. This regulation has led to many changes in all major companies in the European Union and in its institutions. Other regulatory developments are likely to have a significant influence on the European Union.
The European Union is influenced by Political, Economic, Social, Technological, Ecological, and Legal elements, which have a more or less significant impact on it at different scales.
Source: Europa